Jet Airways Lenders Challenge Ownership Transfer in Supreme Court

Last month, the National Company Law Appellate Tribunal (NCLAT) directed the Jet Airways lenders to transfer the airline ownership to new promoters within 3 months. It also directed the winning bidder- Jalan-Kalrock Consortium (JKC) to complete the remaining formalities. Now, lenders have challenged this decision of NCLAT in the Supreme Court.

Jet Airways Lenders Challenge NCLAT Order

Banks led by the State Bank of India (SBI) have moved to the Supreme Court with a fresh petition. The plea challenges the order by NCLAT allowing airline ownership transfer to the winning bidder. On 21 April, the bench led by Chief Justice of India DY Chandrachud will hear the lenders’s petition.

This order from NCLAT reinstated the hopes of many stakeholders in the revival saga of Jet Airways. In case, the Supreme Court accepts this plea, this will add to the delays and complications. NCLT allowed the ownership transfer of Jet Airways in January 2023, but the order has not been implemented yet.

The NCLAT last month directed banks to complete the ownership transfer of Jet Airways to the Jalan-Kalrock Consortium within 90 days. Not just lenders, it also directed the consortium to obtain the Air Operator Certificate (AOC) from the Directorate General of Civil Aviation (DGCA). Having an AOC is mandatory for operating an airline in India.

In addition to obtaining the AOC, the consortium was instructed to secure three immovable properties located in Dubai within a period of 30 days.

Payment of Remaining Dues

Out of the required payment of Rs 350 crore, Jalan-Kalrock Consortium paid Rs 200 crore on time. For the remaining Rs 150 crore, the lenders will utilize the security to offset against a performance bank guarantee. With this, the Jalan-Kalrock Consortium will complete the entire payment of Rs 350 crore.

From this money, the NCLAT asked Jalan-Kalrock Consortium (JKC) to settle the payment dues of airline workers, employees, creditors, and other operational expenses.

While delivering the order, NCLAT Chairperson Justice Ashok Bhushan expressed hope and confidence that all the parties involved in this process will work towards implementing the resolution plan. He asked everyone to make sure that the first Corporate Insolvency Resolution Process (CIRP) in the aviation sector in India becomes successful.

India, Airlines & CIRP Process

There is no doubt in saying that India has historically been a burial ground for airlines. From the bankruptcy of Kingfisher Airlines to the shutdown of Jet Airways, the banks have always suffered. The insolvency proceedings of GoFirst are the cherry on top.

Currently, there are two CIRP processes going on in India – Jet Airways and GoFirst. The latter airline was grounded in May 2023. Since then, it has been fighting in the courts and is now squatting for a new owner. The insolvency proceedings timeline for GoFirst has been extended until June.

Ace Aviation won the bid to acquire three Boeing 777s of Jet Airways, parked at Mumbai Airport. These aircraft will be ferried out of Mumbai, whenever they become airworthy. Ace Aviation has already obtained the freighter conversion slots for these aircraft. These B777s will be converted to freighters in early 2025.

Do you think Jet Airways will fly again? Discuss in the comment section.